Investors Appear Satisfied With CVC Brasil Operadora e Agência de Viagens S.A.'s (BVMF:CVCB3) Prospects As Shares Rocket 28%

CVC Brasil Operadora e Agência de Viagens S.A. (BVMF:CVCB3) shares have continued their recent momentum with a 28% gain in the last month alone. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 12% over that time.

After such a large jump in price, you could be forgiven for thinking CVC Brasil Operadora e Agência de Viagens is a stock not worth researching with a price-to-sales ratios (or "P/S") of 1.4x, considering almost half the companies in Brazil's Hospitality industry have P/S ratios below 0.4x. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for CVC Brasil Operadora e Agência de Viagens

What Does CVC Brasil Operadora e Agência de Viagens' P/S Mean For Shareholders?

CVC Brasil Operadora e Agência de Viagens could be doing better as it's been growing revenue less than most other companies lately. Perhaps the market is expecting future revenue performance to undergo a reversal of fortunes, which has elevated the P/S ratio. However, if this isn't the case, investors might get caught out paying too much for the stock.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on CVC Brasil Operadora e Agência de Viagens.

How Is CVC Brasil Operadora e Agência de Viagens' Revenue Growth Trending?

In order to justify its P/S ratio, CVC Brasil Operadora e Agência de Viagens would need to produce impressive growth in excess of the industry.

Retrospectively, the last year delivered a decent 3.9% gain to the company's revenues. The latest three year period has also seen an excellent 59% overall rise in revenue, aided somewhat by its short-term performance. So we can start by confirming that the company has done a great job of growing revenues over that time.

Looking ahead now, revenue is anticipated to climb by 23% during the coming year according to the five analysts following the company. That's shaping up to be materially higher than the 17% growth forecast for the broader industry.

With this in mind, it's not hard to understand why CVC Brasil Operadora e Agência de Viagens' P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On CVC Brasil Operadora e Agência de Viagens' P/S

The large bounce in CVC Brasil Operadora e Agência de Viagens' shares has lifted the company's P/S handsomely. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

Our look into CVC Brasil Operadora e Agência de Viagens shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless these conditions change, they will continue to provide strong support to the share price.

Don't forget that there may be other risks. For instance, we've identified 3 warning signs for CVC Brasil Operadora e Agência de Viagens that you should be aware of.

If you're unsure about the strength of CVC Brasil Operadora e Agência de Viagens' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.